Savills Vietnam: Real estate market insight in 1H2018

A good macro-economy has supported positive domestic growth and FDI continues strongly. It’s been a very healthy start to 2018 with solid performance across all asset classes.

True demand from foreign investors

Foreign investors remain strongly interested in the Vietnamese property market. Historical QE environment has meant that returns throughout the region have been very low. As QE eases then it may be that emerging markets come under some pressure, particularly currencies. Property will remain a safe haven throughout the short term.

We can see that M & A activity across the region has been pretty hectic. The listed market has been particularly active with over $1.0b IPO’d in the first quarter of 2018. Whilst the HOSE index has recently taken a breather there is still a strong pipeline of property listings to come in the near term. Historically there have been very few listed property stocks. Whilst they bring much needed liquidity for investors, there has been a massive distrust in valuations. Good governance, progressive accounting standards and a maturing stock market will find broad appeal for foreign investors, in listed property stocks.

Overall Vietnamese property returns are generally higher than regional peers. Rental yields across most asset classes are reasonable and with capital gain factored in, then total returns are competitively high. With ‘country risk’ rapidly diminishing then foreign capital is being lured to Vietnam.